WALTHAM, Mass.-- Arbios Systems, Inc. announced that the Company is focusing its day-to-day operations exclusively on obtaining financing or consummating a strategic transaction. In order to preserve the Company's remaining cash resources, the Company's employees were released from employment, except for Shawn Cain, the Company's President and CEO, and Scott Hayashi, the Company's CFO, who will continue to provide services as part-time consultants on a month-to-month basis while they seek funding and strategic alternatives. The Company does not expect to publicly disclose any developments with respect to any financing transactions or strategic alternatives unless and until its Board of Directors has approved a transaction. There can be no assurances that the Company will be able to obtain financing and/or enter into a strategic transaction, or as to the timing or terms of any such transaction.

As previously disclosed, the Company needs to either raise additional funds or enter into a strategic relationship in order to fund the completion of clinical trials for its SEPET(TM) Liver Assist Device, the preparation and submission of applications to the FDA and other competent authorities for marketing in Europe, and the maintenance of its intellectual property portfolio. If a financing or strategic transaction is not consummated, or near consummation, by August 31, 2008 the Company will then need to consider other options, including liquidation of the Company.

"We have spent the past several months seeking financing and strategic opportunities to maintain the momentum we have achieved towards the clinical validation and market approval of SEPET(TM). SEPET(TM) is our extracorporeal (outside the body) liver assist device for blood purification of patients suffering from cirrhosis due to chronic liver disease and who are hospitalized with acute complications due to worsening liver dysfunction and portal hypertension," commented Shawn Cain. "Unfortunately, despite our recent accomplishments, in the current financial environment, we have not been able to obtain any funding."

These accomplishments include:

-- Completing and reporting positive safety results from our Phase 1 clinical study. In addition, signs of clinical efficacy were observed with 79% of the patients meeting the primary endpoint of a two-grade improvement in hepatic encephalopathy, with an average of only two treatments.

-- Establishing exclusive manufacturing agreements with recognized and well-respected manufacturers of medical products, allowing commercial scale production and economics.

-- Securing FDA approval to commence a pivotal clinical trial of the SEPET(TM) device in the US and Europe.

-- Securing the required European approvals to begin the first segment of the SEPET(TM) pivotal trial in Rostock, Germany.

-- Commencing work towards approval to market SEPET(TM) in the European Union (through a CE Mark).

"We remain confident in the benefits that SEPET(TM) may offer patients with chronic liver disease," noted Dr. John Vierling, M.D., FACP, Chairman of Arbios and Professor of Medicine and Surgery and Chief of Hepatology at the Baylor College of Medicine. "Hepatic encephalopathy represents one of the most frequent complications of cirrhosis necessitating hospitalization, and SEPET's rapid time to a sustained two-stage improvement of hepatic encephalopathy observed in the SEPET(TM) Phase 1 FDA trial exceeded our expectations, providing us with much hope for the clinical success of SEPET's pivotal trial," further commented Dr. Vierling. "Unfortunately, unless in the near future we are able obtain additional operating funds, or unless we are able to otherwise enter into a strategic transaction, Arbios will not realize a return on its investment in this company's important and valuable assets and technologies."

About Arbios' SEPET(TM) Liver Assist Device

The SEPET(TM) Liver Assist Device is a sterile, disposable cartridge containing microporous hollow fibers with proprietary permeability characteristics. When a patient's blood is passed through these fibers, blood plasma components of specific molecular weights are expressed through the micropores, thereby cleansing the blood of harmful impurities (e.g., hepatic failure toxins as well as various mediators of inflammation and inhibitors of liver regeneration). These substances would otherwise progressively accumulate in the patient's bloodstream during liver failure, causing hypotension, increasing risk of sepsis development and accelerating damage to the liver, lungs and other organs, including the brain and kidneys, and suppressing the function and regeneration of the liver. SEPET(TM) is designed for use with standard blood dialysis systems available in hospital intensive care units.

About Arbios Systems

Arbios Systems, Inc. is developing proprietary medical devices and cell-based therapies to enhance the survival of millions of patients each year who experience, or are at risk for, life-threatening episodes of liver failure. The Arbios product candidate portfolio includes the SEPET(TM) Liver Assist Device, a novel blood purification therapy that provides enhanced 'liver dialysis,' and the HepatAssist(TM) Cell-Based Liver Support System, a bio-artificial liver that combines blood detoxification with liver cell therapy to replace whole liver function in patients with the most severe forms of liver failure. For more information on the Company, visit http://www.arbios.com.